SEORET

From: A. F. Thorp OBE, Head of F1(Air)

MINISTRY OF DEFENCE Main Building, Whitehall, LONDON S.W.I

Telephone: WHItehall 7022, ext. 7189

179

Our reference: Head of F1(Air)/9737 Your reference:

A. W. Gaminara Esq

Hong Kong Department

Room 247

Foreign and Commonwealth Office King Charles Street

LONDON SW1

N.

REF.

174

1801

RECEIVED IN REGISTRY No. 51

210001071

20 October 1971

AKKIOLS

Bear Bell

Hong Kong

Thank you for your letter of 18 October forwarding the draft of a Memorandum of Understanding to be sent to the Hong Kong Government.

2. The only condition which I consider requires amendment is (vi) in paragraph 3. Admittedly you have faithfully reproduced what was in the telegrams but the fact remains that it could be interpreted as meaning that if there is any HMG action which results in £17M not being spent, there is no obligation on Hong Kong Government to increase the cash element irrespective of the extent to which they might be responsible as well. This is a somewhat suspicious view but it could be put forward. It seems to me essential that this condition is spelt out a little more and I would suggest the following which I have agreed with John Smith on the telephone:-

"(vi)

To the extent that Her Majesty's Government is responsible for less than £17M being spent on capital works or the purchase of buildings in Hong Kong over the five year period of the agreement, there will be no corresponding increase in the cash element of Hong Kong's contribution. Otherwise the Hong Kong Government will make up in cash any short- fall in capital expenditure of £17M."

This brings in the reference to purchase of buildings which has already been accepted by Hong Kong and which it is important should be specified in any Memorandum of Understanding.

3.

Copies of this letter go to Smith and Brack.

R&R.

по

ها

Jans

sincerity

out

つい

26.

S BECRET ET

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